Gmr Pochanpalli Expreessways Limited vs. Additional Director

Held

The High Court dismissed the writ petition, holding that it would not ordinarily exercise judicial review against a show cause notice except in rare and exceptional cases where the notice is wholly without jurisdiction or illegal. The Court cited several Supreme Court judgments, including Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, emphasizing that a writ petition against a show cause notice is generally premature as it does not amount to an adverse order affecting rights unless issued by a person lacking jurisdiction. The Court found that in the present case, several factors needed determination to conclude the petitioner's claims, and there was no specific tenable ground demonstrating a lack of jurisdiction or error in the respondent department's issuance of the show cause notice. Therefore, interference at the show cause notice stage was deemed unwarranted. The Court permitted the petitioner to submit their explanation within four weeks, after which the respondent authority could proceed as per law. The claims of the petitioner were kept open to be presented before the appropriate authority for determination of contested facts.

Facts

The petitioner, GMR Pochanpalli Expressways Limited, filed a writ petition challenging a show cause notice dated April 28, 2023, issued by the Additional Director, Directorate General of GST Intelligence. The notice proposed a Goods and Services Tax (GST) demand of Rs. 68,26,68,000, along with interest and penalty, on annuity amounts received by the petitioner for the period September 2017 to September 2022. The petitioner was awarded a contract by the National Highways Authority of India (NHAI) for the widening, operation, and maintenance of a section of National Highway-7 on a Build-Operate-Transfer (BOT) annuity basis for 20 years. The petitioner completed construction in 2009 and commenced operation and maintenance thereafter. The show cause notice alleged that the annuity paid to the petitioner for construction and operation was subject to GST.

Key Issues

1. Whether the impugned Show Cause Notice No. 5/2023-24 dated 28.04.2023, proposing a GST demand of Rs. 68,26,68,000, interest, and penalty on annuity amounts received by the petitioner for the period September 2017 - September 2022, is legally sustainable? 2. Whether Circular No. 150/6/2021 GST dated 17.06.2021 is ultra vires and in contravention of Sl. No. 23A of Notification No. 12/2017-CT(Rate) dated 28.06.2017 and the 22nd Recommendations of the GST Council? Petitioner's Arguments: The petitioner argued that the concession agreement was a BOT model, and they controlled the project, providing access to users. They contended that the annuity payments were not a supply of service under Section 7 of the CGST Act and were linked to road access, akin to toll charges. Furthermore, they argued that the taxable event occurred before the enactment of the GST Act, making the levy of GST without authority of law. They also challenged Circular No. 150/6/2021 GST as being contrary to the exemption notifications and GST Council recommendations. Revenue's Arguments: The judgment does not explicitly record arguments made by the revenue respondents.